When Ulika Jesus found his business deep in the red last year, he began offering discounts to customers who set aside their credit cards and paid with cash instead.

“I just couldn’t hang in there anymore,” said Jesus, who owns Omid’s Crown Auto Service in Columbia. “When a little bit of business did come in, I’d end up paying a 3 percent fee on credit card transactions — and there wouldn’t be any profit left.”

Today, Jesus says about one-half of his customers pay with cash, while the other half — particularly corporate account holders — continues to use credit cards. Prices for cash transactions are generally about 3 percent lower than those involving credit cards, he said.

Merchants, most visibly gasoline stations, have been offering discounts for cash payments because their agreements with credit card companies barred them from tacking on surcharges to process plastic.

But now, following a settlement between merchants and credit card giants Visa and MasterCard, that has changed. According to new rules that went into effect Jan. 27, businesses are allowed to charge up to 4 percent on credit card transactions — provided they share their intentions with credit card companies and have clear signs telling customers about their policy.

“Retailers offer cash discounts because they want to reward customers for taking [transaction] costs out of the system,” said Jeff Lenard, a spokesman for the National Association of Convenience Stores in Alexandria. “But the challenge is, do people even carry cash anymore? It’s uncommon that they do.”

Ten states, including California and New York, have banned credit card surcharges altogether, and another eight are mulling similar legislation. The fees are, however, allowed in both Maryland and Virginia, as well as the District.

“To be honest, we’re not seeing very many merchants do this just yet,” said Trish Wexler, a spokeswoman for the Electronic Payments Coalition. “It’s something that generally takes a few years to go into effect.”

Wexler said it took several years for similar legislation to catch on in Australia. Companies, and then entire industries, began dipping their toes into surcharge territory slowly and cautiously.

“We saw it evolve gradually — one airline would try it and see if they could pull it off,” she said. “And then you’d see all the other airlines start to do it, too. Then hotels, and so on.”

In the Washington area, gas stations have long tacked on an additional 3, 4 or 5 cents per gallon for credit card payments.

Gas stations have been particularly enthusiastic about encouraging cash purchases, Wexler said, because it draws more customers into the store, where more merchandise awaits.

“As soon as [customers] step foot inside, there’s a chance they’ll decide to pick up some gum or that six-pack of beer,” she said. “Anything that gets customers into the convenience stores helps.”

Enchanted Nails & Spa in Adams Morgan began posting two sets of prices about a month ago. Gel manicures, for example, cost $28 with cash and $32 with credit cards.

Susan Johnson, who was getting her nails done at the salon Tuesday evening, paid with a credit card.

“I never have cash,” she said. “But since there’s a discount, I’ll bring cash next time. It’s definitely worth it.”

But not every retailer is convinced a two-tiered price structure is a good idea.

“In today’s world, accepting credit cards is just a part of doing business,” said Cheryl Harrington, the owner of Shortcake Bakery in Hyattsville. “Yes, we pay a fee, but we wouldn’t pass that on to the customer.”

Discover and American Express, which were not part of the original settlement, have begun requiring that all credit cards be treated equally. If a retailer decides to impose a surcharge, it must apply to all types of credit cards. (Debit cards are exempt from the rule.)

“We believe [surcharging] is harmful to consumers,” Sanette Chao, a spokeswoman for American Express, said in an e-mail. “It is not a customer-friendly practice for a merchant to attract a customer to its store or Web site to shop, and then to penalize the customer for using a card that the merchant accepts.”

Major retailers such as Target, McDonald’s and Home Depot have said they will not impose credit card surcharges.

But for small-business owners such as Jesus, who are struggling to make ends meet, cash payments have become something of a lifeline.

“When someone swipes their credit card,” Jesus said, “I hope and I pray that maybe next time they will come with cash.”